Make the lenders lend

In trying to fire up the housing market and to get mortgages flowing and to stop little businesses going to the wall the government has bailed out bankers and the City with a massive dollop of taxpayers money.

Question: So why didn’t it attach more strings to the deal?

Answer: Who knows?

There is no point in cutting interest rates or trying to play cricket with the bankers and the lenders if they are going to insist on bowling hand-grenades.

And that’s exactly what they’re doing. There is little sign of them cutting rates and bringing out new mortgage offers as Brown and Darling wanted.

Instead, the reverse is true.

Mortgage offers have been slashed. Rates to borrowers have gone up rather than down. The number of home repossessions by state-owned banks is rising. Businesses big and small are going to the wall. Taxes will rise. And red tape keeps increasing.

The one thing that has become certain out of the Great Crash is that bankers are not to be trusted. In the old days bankers were portly folk in pin-stripe suits and bowlers and it was all done on a handshake. The word of a gentleman was his bond.

But gentlemen in the world of banking seem to be a touch thin on the ground. And given the great shake-out which is happening now – and gathering pace – getting even thinner.

Now that the UK is officially in recession – and Keynesian economics are the order of the day – it’s high time that Brown, currently hailed as the saviour of the financial world, became more demanding with the banks.

Gentle imprecations and pleading with bankers and lenders clearly isn’t going to do the trick. They’re going to grab the money and give as little back as they can get away with.

The government and the taxpayer have saved the City’s bacon. Now it’s payback time. It’s time for the City to start giving something back to the people who have rescued them. And it’s time for Brown, Darling & Co to start wielding the big stick.

Maynard Keynes is now the flavour of the month. Milton Friedman, Ronald Reagan and Margaret Thatcher free-market economics are in disgrace, at least for the time being.

Interventionism rules and the government is going to try and spend its way out of the recession by promoting as many big state sponsored construction projects as it can.

More than one commentator wants to go further. There have been calls to have hedge-funders and their ilk brought back from the tax havens in which they hide to answer
some very serious charges. Very few have shown repentance but, instead, have brazened it out and tried to shift the blame for the carnage on to other people.

If found guilty they should be penalised – and stripped of their assets – the monies going to charities or to help the pensioners and the millions of ‘little’ people, small businesses and ordinary householders, scarred and sometimes ruined by becoming ensnared, often quite unwittingly, in a sleazy culture of gambling and financial profligacy.

To control – well, almost – the commanding heights of the economy, to have a stake in the upper echelons of Capitalism – has, perhaps, a slight smack of Marxism. Be that as it may. But somehow the UK seems to have ended up with the worst of all worlds.

The government is trying to operate the economic levers with politeness where firmness is required, with patience where decisiveness is vital, with Britishness and fair play when all courtesies have been abandoned and the vulgarians are still playing grab it and run.

Investment bankers and hedge funders and the accountants and auditors who sanctioned and signed off he madness must realise that the days of being bothered only with the thickness and the blackness of the bottom line are finished. They have a duty, as does everybody else, to the community which they serve and of which they are merely a part.

If such people cannot learn how to behave properly – with ethics and morals and a sense of tragedy about the way in which they have brought the UK and others to their knees – then the people, that is their governments, will have to impose parameters in which the role of bankers and lenders and providers of mortgages are fundamentally revised